Russia and Saudi Arabia have agreed to cut oil production as world leaders eye historic cuts of as much as 20 million barrels per day in an effort to stabilize crashing oil markets, according to reports from multiple outlets.
A trade war between the two nations has led to an oversupply in the oil market as coronavirus brings the economy to a standstill, crushing demand for petroleum.
Saudi Arabia will limit production by 4 million barrels per day from April production totals, while Russia will reduce output by 2 million barrels per day, according to The Wall Street Journal. The deal was reached at a virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing countries.
This falls below projections from President Trump, who hoped to strike a deal with the two nations to reduce production anywhere from 10 million to 15 million barrels per day.
Energy Sec. Dan Brouillette told CNBC Thursday morning that surpassing the 10 million barrels a day figure could rely on securing commitments from other countries.
“I think they can easily get to 10 million, perhaps even higher. And certainly higher if you include the other nations who produce oil, nations like Canada, Brazil and others, it’s easily, easily done,” he said.
A 20 million barrel per day cut would represent a massive decline in global production equivalent to nearly 20 percent of global supplies, according to Reuters.
Such a deal may be difficult to attain without commitments from multiple countries, leaving talk of a 10 million barrel per day cut very much on the table.
Neither figure would compensate for the decline in oil demand, which has dropped 30 percent due to the pandemic.
Oil was trading at roughly $26 a barrel Thursday morning, down from a February high of $53 per barrel.
Updated at 1:06 p.m.